Overview
A cost-benefit analysis (CBA) is a decision-making tool that finds the difference between what is gained and what is lost in a decision. If you’ve ever made a pros and cons list, you’ve done a basic cost-benefit analysis before. It’s considered a basic tool within Cognitive-Behavioral Therapy (CBT).
In policymaking and financial analysis contexts, the costs and benefits are both measured monetarily, with net present value (NPV) or benefit-cost ratios (1 invested) being the metrics observed to compare decisions or make projections about future resource flows.